INTERVIEW: CEO PGL

PRIVATE LENDING MUST BE CONTAINED

TARIQ AHMED SAEEDI - tariqsaeedi@hotmail.com
Jan 28 - Feb 03, 2008

The total numbers of leasing companies have dwindled to functional seventeen in last two year from operative thirty two all around the country due to the requirement of increasing paid-up capital up to Rs. 200 million. Half of these functional organizations were compelled to close down their businesses or to opt strategic alliance or merger in order to retain whatever little market share they could acquire in the wake of stiff competition by other financial institutions. Leasing operations fall in the category of non-banking finance companies. Government of Pakistan in 2003 allowed NBFCs a diverse operational spectrum, which permitted them to undertake various business activities for progressive enhancement in equity. As a result, the distinction between the various sectors including leasing and investment banking has diminished. Although reforms in financial sectors have facilitated various instrumental investments particularly in leasing business liquidity constraints have yet to be loosened. Unsatisfied with liquidity crunch, financial market astute, Akbar M. Bilgrami, CEO Pak-Gulf Leasing Company Limited, during an interview with PAGE recently, expressed his concern about trivial and useless dichotomy of funds. The company commenced its operation in September 1996. At present, 85% of its net investment in leases is extended to industrial and commercial enterprises, and to individual consumers. It held in last fiscal year total assets of about Rs. 550 million, total equity of around Rs. 250 million, and net investments of near Rs. 500 million.

LENDING TO PRIVATE SECTORS: Lending to private sectors have increased significantly apart from vociferous borrowings made by consumers; which resulted in sharp decline of liquidity available for leasing business. Along with vouchsafing reforms in financial sector that transformed scope and capacity to work of monetary institutions, he moaned at emergence of greedy and dabbler approach into the market. He said every government propounds its economic reformation programmes and leads diversification in the already crowded scene. ‘Sometimes, they are futile.’ Above all, everyone would be free-handed to try his luck in making profits because of the relaxation. What actually happened when government revised its policies permitting financial institutions to launch various activities (financial solutions) from a single plate form, he enquired and replying specialized expertise imperiled. Now, commercial banks can also cater to lessee as leasing companies do. Of course, the competition somehow ensures adequate service delivery, but this should be between same genres of service providers instead of between all industryís participants, he described and adding which has been the issue in present case. There are so many seeking after capital while source of funding remains few. Probably this makes our companyís inability to cater to a big borrower. Owing to shortage of capital, we can not form competitive position to execute deals with blue-chips.

CONSORTIUM FINANCING: Since leasing company could not be financially strong enough to preserve and generate vitally needed cash for industries. In this regard, consortium will be a positive step forward to finance enormous capital order, he underlined. Alone, leasing company can not financially assist corporations to modernize industrial operation. BMR has become buzz-word in recent period that calls for huge inflows of investment. ‘I don’t think so leasing company has this much capital to provide sophisticated and expensive machineries for large scale manufacturing to support modernization and rehabilitation process.’ Having over 40 years of local and international experience in banking and finance industry, Akbar Bilgrami joined Bank of America in 1961 as its founder member when it was in operation in Karachi. He knotted to the bank for 24 years and parted his ways later on, which, he thinks, was the cruelest repentance for his entire professional life. During his time there, he was enjoying full-bloomed life as perks and facilities were at par with work-loads. Following his completion of undergraduate in India, he migrated to Pakistan in 1958 and finished his graduation from S.M. College in 1964. Bilgrami has also headed BCCIís Panama operation. He is a person having many feathers on his cap. Equally, he is a staunch advocate of doctrine of humanism. He said a person should first be a good human being for others. He put dedicatedly his efforts to rise from bottom to up. Money has never been in my priority list, he clarified. ‘I do focus on work-accomplishment approach with honesty regardless of rewards.’ To establish investment bank in Pakistan in 1988, he started designing feasibility report but couldnít make it out for personal reasons.

WITH PGL: He was a promoter and founder managing director of PGL since its inception. In 1998, he pioneered the concept of debt collection and set up a financial consultancy. Unlike contemporary debt collection modus operandi, we recruited and trained work force to asses causing factor behind insolvency. As, he believes, in most of the cases inability of loan repayment is not conscious. Lack of coordination between lender and borrower often created problematic confrontation. We followed legal channel to book insolvency from either side. Often, over-charged utility bills of people were reconciled. His consultancy recovered loans and arbitrated financial issues of organizations such as related to banking and telecommunication industry.

Asked what the difference between commercial bank lending and leasing is, he replied it is same except in later mode of lending arrangement leaser holds the title of ownership till maturity of the loan. That sounds like Islamic banking! However, there are some other peculiar distinctions between these two, he added.

While concluding he said, human resource should expand their learning skills to imbibe new concepts of banking and finance. Islamic banking has added a new dimension in banking and finance industry of the nation. And, he believes that professional should tend to learn about this field. Bankers should always be engaged in training and development of themselves as well as of their work force. Human resource is our very weak area that must be improved. In this competitive world, a person has to be a master of all trades. Learned workforce is highly needed in this profession, he emphasized. It is beyond any doubt that best human resource can produce best outcomes.